UK inflation leaps to higher-than-expected 3.5%, ONS says

Time of India

21-05-2025

British inflation surged by more than expected in April including in areas watched closely by the
Bank of England
, according to figures published on Wednesday that are likely to keep the central bank on its path of gradual
interest rate cuts
.
The annual rate of
consumer price growth
leapt to 3.5 per cent in April from 2.6 per cent in March, the Office for National Statistics said, the highest reading since January 2024 and the largest increase in the rate since 2022 when inflation was rocketing.
A Reuters poll of economists had pointed to a reading of 3.3 per cent in April while the Bank of England earlier this month projected inflation of 3.4 per cent .
The data are likely to further diminish expectations in financial markets that interest rates will be cut more than once by the end of 2025.
Services price inflation - a key metric of domestic inflation pressure - leapt to 5.4 per cent in April, above all forecasts in the Reuters poll for an increase to 4.8 per cent . It was far above the BoE's prediction a reading of 5.0 per cent for April.
The ONS said the timing of the Easter holiday, which took place in April this year, was probably a contributor to the big jump in air fares which surged by 27.5 per cent from March, the second-biggest month-on-month increase on record.
April saw increases in gas, electricity and water prices, alongside higher taxes on employers - all of which are likely to push up prices.
Earlier this month the BoE predicted that inflation would peak at 3.5 per cent this year.
Some officials at the central bank disagree with its key assumption that the climb in inflation will not have longer-running effects on pricing behaviour.
BoE Chief Economist Huw Pill said on Tuesday the pace of interest rate cuts had been too fast given still strong wage pressures on inflation, but his vote this month to keep borrowing costs on hold was likely to prove "a skip" not a halt.
The BoE lowered interest rates by a quarter point to 4.25 per cent on May 8 in a three-way split vote, with two members of the Monetary Policy Committee favouring a bigger cut, and two - including Pill - favouring a hold.